Long AKRX (Akorn Inc) Short PKD (Parker Drilling Company) Spread

The Long/Short Equity spread of AKRX/PKD has just broken out to a new high and finished Friday's trading session at the high of 12.82.

Akorn Inc (pharmaceuticals) has reported consistently good earnings with an EPS change of 80% in the last quarter and also an annual ROE (Return on Equity ) of 27.1%. It trades at a slightly higher P/E ratio of 48 which has been justified so far by the continued increase in EPS , with the next results due in March 2015.

Parker Drilling is one of many oil sector stocks which is now trading at a 52 week low with poor EPS results and an outlook to match. Trading at only $3, one may ask how much lower it can go although there is no sign of let up on the price of oil just yet and so oil sector stocks will continue to match accordingly.

It is just as easy to substitute this stock for many others in the same sector, such as OAS for example.